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Article By: MartinWilliams
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ETF Rotation Strategies
One interesting development that was made possible by the vast increase in the number of exchange traded funds available is the possibility to devise a profitable ETF rotation strategy for timing the stock market. Such a strategy can theoretically allow an investor to find the sectors of the market that are increasing in price.
Broad Index ETFs
Index ETFs were introduced about 20 years ago to track the broader stock market indexes such as the famous Dow Industrials and the index tracking etf, SPY which tracks the S&P 500 Index. These exchange traded funds generally follow the major indexes and are fairly less volatile (move less in each direction) than other more specific sector and country ETFs.
Exchange Traded Funds that Track More Specific Sectors of the Market
Other ETFs represent more narrow market sectors. These ETFs have proliferated in recent years, allowing a sector rotation strategy to be developed that looks to very narrow market segments to determine where to invest. Such ETFs as OIL (oil), GLD (gold) and SHY (short term bonds), allow a system to be developed that seeks to find which narrow market segment is likely to outperform in the near term and to move the assets in the system into such narrow segment until a better candidate is found. These ETFs provide some of the benefits of diversification that ETFs generally enjoy, while allowing some of the volatility that investing in narrow segments can enjoy also.
Specific sectors can, of course, move dramatically within a short period of time - making selection of the proper exchange traded fund critical to any ETF rotation strategy.
Regional Exchange Traded Funds
ETFs in recent years have been created for very specific country indexes -there are country specific ETFs for countries (or regions) as small as Hong Kong, South Africa and even Belgium. These country specific ETFs allow the investor to devise a rotation strategy that moves into the "hot" region and then out again when another region is poised to outperform. The last type of ETF that is useful for creating sector rotation strategies are the country or region specific ETFs.
Exchange Traded Fund Timing and Rotation Strategies - provide vast opportunities for great return for the aggressive investor.
ETFs are available for just about every sector of the markets - aggressive traders and investors have a whole world of opportunities (literally) to profit from.
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About the Author
Information provided by a leading expert in the creation of mechanical timing systems for the one of the longest running authorities in timing systems, Timing-Signals.Com,, providing market timing and mechanical timing signals for exchange traded funds (ETFs) and the federal employees Thrift Savings Plan at ETF Rotation Strategies
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